Lodha’s pre-sales surged 37% y-o-y to a record Rs 34.6 bn, helping the company meet its Rs 90-bn pre-sales target for the year. A 36% rise in customer collections led to a 6% q-o-q decline in India biz. net-debt. UK’s investments also did well with a further Rs 17 bn in sales, helping part pre-payment of the associated bond. Strong housing demand and new project acquisitions are likely to help drive double-digit sales growth for Lodha. Maintain Buy.
Strong housing sales momentum in Q4… The Q4 pre-sales of Rs 34.6 bn for Lodha are a record quarter for the company. For FY22, pre-sales of Rs 90.2 bn, +51% y-o-y, are also a record. Mgmt had expected land-transaction/warehousing deal monetisation to drive a strong Q4. However, with no such announcements, we believe the Q4 performance is a reflection of the housing market strength and Lodha’s own strong project pipeline.
…could drive FY23 estimate upgrades: We currently build in Lodha’s pre-sales in FY23 to rise by 18% y-o-y to `106 bn. Given the strong Q4, and a weak Q1 in base, we believe significant upgrades to the estimate are possible. We await management’s launch pipeline and guidance post Q4 results.
Good UK performance too: Lodha’s UK investment projects saw incremental sales of £173 m (~Rs 17 bn) in Q4; taking total sales during the year to Rs 53 bn. During Mar’22, Lodha had pre-paid $170 m of the $225 m bond outstanding. Continued sales traction should ensure the remaining bond redemption during FY23.
Deleveraging continues: India net debt declined by `5.9 bn q-o-q to Rs 93.1 bn. The net debt decline has been helped by the pick-up in customer inflows of 36% y-o-y/34% q-o-q to Rs 28.4 bn. Combined with the UK bond pre-payment, we estimate Lodha’s consol. net debt to have declined by ~Rs 18 bn q-o-q to ~Rs 96 bn. While Lodha is on a project addition path, we believe net-debt may still decline in FY23, helping the growth-deleveraging dynamic continue. Maintain Buy with Rs 1,475 price target.
Also read: Macrotech Developers Rating: Sales momentum was sustained in Q3FY22
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